Officially Official: General Motors Sells Opel-Vauxhall To PSA Groupe

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It’s a done deal: today, after weeks (or possibly even longer) of negotiations, General Motors has officially announced that it has sold its Opel-Vauxhall subsidiary to French automaker PSA Group for €1.3 billion as well as GM Financial‘s European operations for €0.9 billion. The transaction has a total value of €2.2 billion and is being painted as beneficial for both parties.

For GM, the deal immediately improves its financial health (such as EBIT-adjusted, EBIT-adjusted margins and adjusted automotive free cash flow) while also de-risking the balance sheet. It also further enables the automaker to lower the cash balance requirement under its capital allocation framework by $2 billion, which it intends to use to accelerate share repurchases, subject to market conditions.

For PSA, which presently markets the Peugeot, Citroen and DS Automobile brands, the acquisition of Opel-Vauxhall, which generated revenue of €17.7 billion in 2016, instantly makes it the second-largest automotive company in Europe with a 17 percent market share, second only to the Volkswagen Group. The deal thereby creates a sound European foundation “for PSA to support its worldwide profitable growth”.

PSA Group CEO Carlos Tavares shakes hands with GM CEO Mary Barra on March 6, 2017 as the two automakers announced a transaction worth €2.2 billion

Furthermore, General Motors describes the transaction as “advancing [its] transformation” and “unlocking value” by reshaping the company,

“We are very pleased that together, GM, our valued colleagues at Opel/Vauxhall and PSA have created a new opportunity to enhance the long-term performance of our respective companies by building on the success of our prior alliance”, said Mary Barra, GM chairman and chief executive officer.

“For GM, this represents another major step in the ongoing work that is driving our improved performance and accelerating our momentum. We are reshaping our company and delivering consistent, record results for our owners through disciplined capital allocation to our higher-return investments in our core automotive business and in new technologies that are enabling us to lead the future of personal mobility.”

“We believe this new chapter puts Opel and Vauxhall in an even stronger position for the long term and we look forward to our participation in the future success and strong value-creation potential of PSA through our economic interest and continued collaboration on current and exciting new projects,” Ms. Barra concluded.

Strengthening GM’s Core Business

Both automakers are positioning the deal as “strengthening each company for the long term”. The General describes it as “another step in GM’s ongoing work to transform the company, which has delivered three years of record performance and a strong 2017 outlook, and returned significant capital to shareholders.”

As such, the automaker states that the transaction “will strengthen GM’s core business, support its continued deployment of resources to higher-return opportunities including in advanced technologies driving the future, and unlock significant value for shareholders.”

Immediate Gains For GM

The transaction will immediately improve GM’s EBIT-adjusted, EBIT-adjusted margins and adjusted automotive free cash flow while also de-risking the balance sheet, enabling GM to lower the cash balance requirement under its capital allocation framework by $2 billion, “which it intends to use to accelerate share repurchases, subject to market conditions.”

Long-Term Benefits For GM

The deal also enables GM to “participate in the future success of the combined entity through its ownership of warrants to purchase shares of PSA.”

Existing Supply For Holden And Buick Brands

Long-Term Collaboration Opportunities

The deal also makes references two long-term collaborative efforts. The first surrounds “further deployment of electrification technologies” while the second involves PSA potentially sourcing fuel cell systems from the GM/Honda joint venture.

Benefits For PSA

“We are proud to join forces with Opel/Vauxhall and are deeply committed to continuing to develop this great company and accelerating its turnaround,” said Carlos Tavares, chairman of the Managing Board of PSA. “We respect all that Opel/Vauxhall’s talented people have achieved as well as the company’s fine brands and strong heritage. We intend to manage PSA and Opel/Vauxhall capitalizing on their respective brand identities. Having already created together winning products for the European market, we know that Opel/Vauxhall is the right partner. We see this as a natural extension of our relationship and are eager to take it to the next level.”

“We are confident that the Opel/Vauxhall turnaround will significantly accelerate with our support, while respecting the commitments made by GM to the Opel/Vauxhall employees,” continued Mr. Tavares.

Specifically, the transaction will allow substantial economies of scale and synergies in purchasing, manufacturing and R&D. Annual synergies of €1.7 billion are expected by 2026 – of which a significant part is expected to be delivered by 2020, thereby accelerating Opel/Vauxhall’s turnaround. Leveraging the successful partnership with GM, PSA expects Opel/Vauxhall to reach a recurring operating margin of 2 percent by 2020 and 6 percent by 2026, and to generate a positive operational free cash flow by 2020.

PSA, together with BNP Paribas, will also acquire all of GM Financial’s European operations through a newly formed 50%/50% joint venture that will retain GM Financial’s current European platform and team. This joint venture will be fully consolidated by BNP Paribas and accounted under the equity method by PSA.

Terms of the Agreement

The following terms of the agreement were released by both automakers.

Assets Transacted

The transaction includes all of Opel/Vauxhall’s automotive operations, comprising:

Opel and Vauxhall brands

Six assembly facilities

Five component-manufacturing facilities

One engineering center (Rüsselsheim, Germany)

Approximately 40,000 employees

GM will retain the engineering center in Torino, Italy.

Transaction Valuation

Opel/Vauxhall automotive operations will be acquired by PSA for €1.3 billion.

GM Financial’s European operations will be jointly acquired by PSA and BNP Paribas for 0.8 times their pro forma book value at the closing of the transaction, or approximately €0.9 Bn.

The transaction has a total value of €2.2 Bn, for Opel/Vauxhall automotive operations and 100% of GM Financial’s European operations.

The transaction value for PSA, including Opel/Vauxhall and 50% of GM Financial’s European operations, will be €1.8 Bn.

Warrants

In connection with this transaction, GM or its affiliates will subscribe warrants for €0.65 billion. These warrants have a nine-year maturity and are exercisable at any time in whole or in part commencing 5 years after the issue date, with a strike price of €1. Based on a reference price of €17.34 for the PSA shares, the warrants correspond to 39.7 MM shares of PSA, or 4.2 percent of its fully diluted share capital. GM will not have governance or voting rights with respect to PSA and has agreed to sell the PSA shares received upon exercise of the warrants within 35 days after exercise.

The issuance of the warrants is subject to the vote of shareholders at PSA’s General Meeting of May 10th, 2017. The three main shareholders of PSA — the French State, the Peugeot family and DongFeng — represent in aggregate 36.6 percent of the share capital and 51.5 percent of the voting rights of PSA have undertaken to vote in favor of the resolution related to the issuance of the warrants to GM.

In the event the warrant issuance reserved to GM and its affiliates is not approved by PSA’s General Meeting, PSA will settle the €0.65 billion in cash over five years.

Intellectual Property Licenses

Opel/Vauxhall will also continue to benefit from intellectual property licenses from GM until its vehicles progressively convert to PSA platforms over the coming years.

Non-Cash Charge

In connection with the transaction, GM will take a primarily non-cash special charge of $4.0-4.5 Bn.

Pension Fund Commitments

General Motors retains responsibility for all of Opel/Vauxhall’s European and U.K. pension plans, funded and unfunded, with the exception of the German Actives Plan and selected smaller plans. PSA will take over the obligations for Opel-Vauxhall German Actives Plan and selected smaller plans.

GM will pay PSA €3.0 billion for full settlement of transferred pension obligations.

Closing Conditions

The entire transaction is subject to various closing conditions, including regulatory approvals and reorganizations, and is expected to close before the end of 2017.

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72 Comments

Not mentioned in the article is that GM pays PSA 3 billion for its pension liabilities, according to the European press.
What remains unclear, is if PSA takes over all of GM Europe or if the deal excludes the import of Cadillac and Corvette. The French press talks about “GM quits Europe” and the international press only refers to the Opel and Vauxhall brands as well as the financial arm.
In addition, it would have made more sense to have the money flowing to R&D to bring new products to the 2 markets GM is still active in rather than putting it in “share buy-backs”. It’s clear the whole deal is more about raising the stock price rather than securing the long-term viability of GM. One bad sales quarter and the stock price will drop again to the pre-sale period, and the whole deal will have been in vain.
It could also be interesting to research in how far the top management of GM benefits from this deal, which I think is still a bad deal in the longer run for GM itself (look above at the length of the benefits to PSA vs the length of the benefits to GM – which have been made larger by adding 3 titles to show some “balance”).
Finally, all the arguments given by GM in this deal might very well be applicable also to Holden. So we know what’s next… In fact, if ALL of GM were sold, the stock price would climb even further. Something to think about.

If this Opel Holden goes for the same 11 years that the VE/VF Commodore went on, then the $2.3bill would have been payed back twice over. Is GM literally paying PSA to take Opel away from it? Using Holden as the back door and Commodore royalties as the brown bag?

Mike – the 3 billion in pension liabilities is indeed mentioned in the article (see Terms of Agreement section at the end).

Sure, the press can refer to it as they want to… but what we don’t know is what the long-term strategy really is… in other words, is it “quitting” Europe entirely, or simply putting a pause on it in hopes of bringing another brand (Chevrolet) to market in due time.

The share buy-back is necessary and should boost the stock price and give GM more control of its direction. Boosting the stock price is a necessity because it is hurting GM in attracting new and top employee talent (stock options are not at all attractive when your shares are at the same level as they have been since going public), and more control is necessary in order to prevent “activist investors” (ranging from FCA to the likes of Henry Wilson) from coming in and disrupting the business direction.

It’s vital to note that 1) the buy-back is not a continuous deal and that 2) it’s not an all-or-nothing affair. So, when GM buys back what it deems are enough shares, it will stop. In addition, the sale of Opel does actually free up money for other endeavors (such as R&D)… they’re not going to contribute 100% of the annual savings from selling Opel towards share buy-backs, but rather budget it responsible.

Ultimately, what this sale is really about is giving GM a true fortress balance sheet and making the company healthier from a fiscal standpoint. It’s was relatively healthy with Opel in the fold but without it, GM needs so much less operating capital. The sale significantly lowers GM’s break-even point as well as the assets it must keep on hand for a “doomsday scenario” (downturn in the industry), which is widely expected. Take all that and funnel it into productive (profitable) areas can make the company healthier still.

Alex you raise good points. But investors like companies that are growing not contracting. Additionally GM is putting all its eggs into only two large baskets, one of which does not have a true democracy. This is not a good long term risk management move.

The stock market has already reacted. After a quick blip GM prices are diving as the details sink in.

Though this deal does contract GM from a global sales volume and market share standpoint in the short- to medium-terms, it also sets the company up for growth in the long term in the realms of:

1. Focusing on and Investing in global brands, enabling GM to run two primary global brands, rather than split its business across three more or less mainstream regional brands, and
2. Opening up capital to invest in more profitable opportunities, such as autonomous vehicle tech and new vehicle segments for Chevrolet and Cadillac, which could eventually permeate to Europe (though they could, it’s also possible that they could not).

The stock market’s reaction is actually positive: though shares are down slightly today, the reaction to the sale of Opel-Vauxhall was built into the stock price over the last two weeks. The market adage of “buy on rumors, sell on announcement” is alive and well here

Thanks for your reply. Just a quick thought back: “they’re not going to contribute 100% of the annual savings from selling Opel towards share buy-backs, but rather budget it responsible”. Business Insider today published a quote from Chuck Stevens: “With $8 billion remaining to buy back from a total of $14 billion currently authorized, GM will now be able to buy back $5 billion in 2017, versus a previously expected $3 billion”. So this looks to me as if the total amount will be used for share buy-backs.

I agree with your arguments pro-buy-back, but I still remain convinced that buy-back operations do nothing to strengthen the underlying business. It’s just a matter of artificially getting a higher stock price by spending money which could otherwise have been spent to the core business.

I have also been thinking about “getting back to Europe with Chevy and Cadillac”. I have 3 arguments why this would not happen:

1) The press is very clear on this here in Europe, as they announced: “GM quits Europe”, meaning they stop all activities at the end of 2017.

2) One of the reasons given by Mrs Barra to the press on why GM would leave Europe, is because of regulations and the investments needed to have the necessary technology to stay competitive in a market with mainly small cars and little engines, which is less the case in other markets. If Chevy or Cadillac would like to come back to Europe, they will have to do these investments, on a much smaller sales basis. If it’s not worth the burden selling more than 1 million cars a year, then why would it be lucrative selling a couple of 100000 cars a year? It would mean extra money bleeding, without any certainty of success.

3) Finally, with this move GM has angered millions of customers who bought an Opel because of its German / US roots (and synonym of quality), and who will find themselves in a situation where this legacy is gone and French lower-quality replacements will be offered. In other words: the resale value of their cars will dramatically drop. Equally Cadillac and Corvette owners in Europe at the end of this year won’t have any spare parts any more, no dealers where to service their cars any more, and a void warranty. Their car of more than 50000 euros will be worth zero starting 2018. The image and marketing damage to the GM-brand by hurting such a large European buying public won’t be over in a couple of years…

The only way I see GM re-entering Europe is by buying another (more profitable) player, or by launching new mobility services in Europe (like Maven or Lyft). But without any network or onsite presence this won’t be obvious. And they won’t be able to do it under the GM-name (as explained above).

GM will eventually need many of those European mandated technologies if the company hopes to boast best in class fuel economy/emissions on a global level. Furthermore, it’s just a matter of time before the US adopts similar regulations when democrats retake power.
Lastly, companies like Honda who hold smaller market share than Opel will adapt proving that this is not a financial make or brake-no one else is quitting Europe.
Just a few years ago Chevrolet was pulled in an effort to aid Opel. Opel set up shop in Oz only to quickly quit. GM is lacking long term vision. Barra is seen as visionary for betting on unproven, maybe forms of future transport while neglectingthe important issues of today. Opel it’s building its first viable line up since the 1990s and will quickly be back in black even without PSA platforms.

Opel and Vauxhall are likely to prosper under PSA and as such this deal is better for their future.

But what does GM get out of this deal? Why would GM pay out Euro 3 billion for current employee pensions plus take on the existing retired employee pensions and lose access to one of the major global markets? In addition GM Europe Financial has been discounted 20% from book value. Net, net GM is paying billions and incurring future pension obligations to leave the European market.

What is GM’s end game for other global markets? There is no mention at all. Neither is there any mention of which markets PSA has access to or restrictions imposed. I have read GM’s news release and watched the full news conference but none of these issues were addressed.

The need for a global product vision statement from GM has never been more acute.

There was also no mention of possible embargoes for the two companies on entering specific markets (e.g. USA, China, Australia, especially with Opel branded cars more or less identical to their already marketed twins under Buick and Holden brands), or the possible re-entry of Chevrolet branded compact cars into the European market (listening to Mary Barra, one could think that GM has given up on the European market since that one is moving away too much in their regulations from those in other GM markets).

There was also no mention of the fate of the existing cooperations on Light Commercial Vehicles (LCV) of Opel and PSA respectively with Renault, FIAT and Toyota.

Ok now GM can revive pontiac and bring chevrolet and maybe buick to europe when they got rid of opel/vauxhall which were their divisions for european market for like 90 freakin years!! Oh I forgot, current GM leadership has gone nuts and they just gonna cut themselves with nothing to bring back… so we aint gonna see this… congratulations, William Durant must be turning in his grave!

Died broke because he gave his money away to people he didn’t owe but felt a debt towards. Buying up companies and rationalizing them gets praised when Romney does it, or the Kochs do it, or Liberty does it with F1. Stock prices got low because the Du Ponts were sieging Durant through false-flag companies. He went on to do other things, like the Bowling Alley which was turned around from a failure to doing well and employing many young kids in North Flint who would otherwise have had absolutely no jobs at all. Thanks Billy! If you want to understand understanding, perhaps you need to look up the Dunning Kruger Effect and get yourself some lemon juice!

Billy was another sad case much like Tesla where they were great at innovation but had little business sense. But saw much success but failed to capitalize on it with financial failure.

Now if you equate success with being dropped by the worlds largest automaker twice for nearly killing the company both times and the failure of your third attempt at auto-making then maybe you are not cut out for business too.

Billy ended up running the bowling ally not because he wanted to redeem the boys in Flint but he needed a way to support his family. It is nice he gave low paying jobs to the boys but if he had run GM better he could have even employed not only the boys at higher paying jobs but their children and their grandchildren.

As for giving his money away then yes if you count failed stock deals and a major gambling addiction.

The Romney’s and Kocks do buy up companies but once they do they know what to do with them. Du Ponts appear to have had a handle on it too. None of them went to running a bowling ally.

Time to get your eyes checked so you can see things as they are not distorted as you do.

Billys history is well documented and anyone can verify how things turned out. It is sad to see so much talent go to waste. If he had a partner to handle the money they would have made a great team.

Scott3, I’ve asked you to do this before, and now I ask again, please read “Billy Durant, Creator of General Motors” by Lawrence R Gustin who was a Flint librarian who knew the official GM historian. Gustin has proved, with publically available documents from GM and from stock exchange records, that the Du Ponts organized pressure on GM shares for years, like a siege, eventually Durant’s moral tendency to pay back all stock losses to others from his personal accounts led to his loss of GM like a sporting loss, not a loss through incompetent management.

In fact, there are very good mathematical analyses in libraries in both Harvard and Stanford, and the University of Michigan, that the Du Pont’s siege of Durant directly seeded the 1929 stock market crash.

For absolute proof, look at the fact that the Du Ponts installed Nash to succeed Durant, and look at the history of his work. Durant – not a mismanager, Nash – a mismanager. Historically proved.

Here’s where truth meets post-truth. I got a published author, with checkable connections to historical records in Flint and in GM. I named the author, named the publication, and I gave pertinent points directly from the named book. My reference to the author/book, and the facts in the book itself, can all be checked independently by literally anyone who reads our comments.

You got an ‘uncle’ with no name, no job, no connections, nothing we can check at all ever. You’re asking us to BELIEVE you. I’m asking folks to learn or remember actual checkable facts. Truth is checkable, ask Karl Popper. Belief – that’s for priests.

Now you are joking! Opel Insignia on Alpha platform would outsell ATS. Mark Adams is the best GM designer.
Designs like Insignia, Avista, Velite and Aveair are what Cadillac needs.
As is, Cadillac design maybe rivals Chrysler 300, and no one else.

Well, tastes are individual. I don’t like Mark Adams and don’t consider him a good designer.

Mind you, the Buick Avista and Buick Avenir concept cars were created by the GM Holden design lab in Australia, without Mark Adam’s oversight. Also the acclaimed Opel GT concept car is a creation of the Australian design lab, and the design of the Cruze hatchback (which in my eyes looks better than the Opel Astra hatchback).

In my eyes, the Australian design lab produces the best design in the GM world, and that is the reason that it — besides the Lang Lang proving ground — the only productive department of GM Holden which will be left over after the closure of Holden manufacturing in Australia, whereas the technical development center is also to be closed.

The 2016 Vauxhall-Opel GT Concept had nothing to do with the Australian Design Studio. Mark Adams is a very talented designer even if you don’t particularly like his work. The ITDC is not closing and is part of the transfer to PSA Group. Given that GM has just said it stands 100% behind Holden I would look for a closure & withdrawal from the Australian market within 2 years.

Your and my taste and each of ours different asessement of Mark Adams can’t be resolved by a dispute, but on this fact you are wrong, by claiming that “The 2016 Vauxhall-Opel GT Concept had nothing to do with the Australian Design Studio”.

I wanted to show you a story from the Port Melbourne lab themselves, but I could not find it again, but this January 19, 2016 article from this very gmauthority Blog:

Facts are indipendently verifyable, and if you care to look at those photos shown before the Opel GT was presented at last year’s Geneva motor show, you might recognize the Melbourne skyline as the background to those images.

For 2 long standing posters on here it is unusual for us to disagree but you are correct we will have to agree to having different opinions on Mark Adams talents. However, your “facts” about the GT Concept are a little short on proof. The article Sean wrote and the reference to the Australian Motoring article base most of their opinion on the fact the background n the picture is Melbourne – which it is. But the image software GM use worldwide can take an image of a car and insert any badge, wheel design or background to suit their requirements. The article also expected Holdens involvement to be confirmed by Opel at the cars launch, it wasn’t. Not in any press release by Opel or Vauxhall. All it confirms is that the car was designed in Germany. Considering every project that Holden are involved in is proudly boasted to the press (and rightly so) and on this occasion Holden refused to comment speaks volumes that they weren’t actually involved. Also the Motoring article is only suggesting that Holden just built the GT not designed it. I will try and reach out to someone I know who works in the ITDC and see if I can get a concrete answer. At present on the balance of available evidence I think I am right.

I have no opinion on Mark Adam’s talents, I only have opinions on his results and his way of presenting them. I don’t know his talents, I can only see what he does and what he produces. The only Opel of the past decades which I considered really good looking was the Ascona, everything else was bland. Oh, I also liked the looks of the Antara. I learned to prefer the stuff produced by the Australian GM Holden design studio.

On Holden’s work on the Opel GT, I invite you to read this account from email.holden.com.au:

Now GM Australia Design, one of only two GM studios with the capability to fully create a concept from the design to the show car, has unveiled its biggest project for General Motors Europe, the stunning Opel GT Concept Car.”

I’m well awareas to where these products were designed. In fact, Avista was done by two very young, no name designers in NA, not AU.
Mark Adams put forth maybe not the designs but the ethos that influenced the proportions as well as other cues present on many of Buick concepts.
Insignia looks like Cadillac’s Escalla (sp?) concept, and Adams would be a coup for Cadillac.
Was it Buick or Opel that designed the fantastic headlights seen on Encore and Insignia? Hopefully Buick can keep this sleek (better than Cadillac, Lincoln, Lexus) cue?

Not withstanding a good bit of the Buick models are Opel re-badges. There would still be a place at the table for Buick in the US as it stands. For now, those will be built by PSA Peugeot Citroën until GM makes other arrangements.

In the long run this is going to be fine. We still have many details to absorb but at least we can see the basics of why both companies did it.

GM did it for two basic reasons. One Opel had really hurt their stock value even with profits everywhere for the last few years. And GM is looking to buy back stock to strengthen prices and prevent someone coming in and doing a buy out against their will.

PSA has a dream of going global as they have no choice as they will die where they are now. This move will not be easy or cheap. Odds are they will struggle just as FCA is now as they are not known for quality or have anything really popular to offer globally.. They do offer vehicles that make for good punch lines for Jeremy on Grand Tour.

Lets face it the Opels here have been good cars but not cars people have really ever took to heart. Even the Regal did ok but is far from a run away success. I expect over time GM will remove the two models they have and move to do most of the Buick work in China and Detroit.

Watch in the future and that GM stock will rise up and hopefully remain stable. Compare it to other automakers and you will see it in better shape than many others.

As it was someone could have come in and broke up the company and sold off or closed what they did not want including Opel anyways and just took the trucks and SUV models that make all the money.

Then why didn’t the all mighty Mary Barra try to make it work? GM had Opel and Vauxhall for over 80 years and barely 3 years into her term, poof they are gone. On paper it might look good now, but trust and believe this will bite GM in the butt in the years to come when the Euro market rebounds. Yes it might have been a money loser the last several years, but to just sell them off without letting the new products funnel through and see how they would be received is ludicrous.

GM tried to make Opel work because there was no other choice at the time. PSA was not even in the running to buy anything or anyone because it was on the brink of bankruptcy before being saved by the French government.

GM’s plan to turn around Opel started way before Barra’s appointment precisely because there was no other choice. The team did its due diligence, but could have gone further by closing another 2-3 plants.

The deal here is not in the products… even with great products in its portfolio that are as competitive as the anything else out there, Opel was still leaking money. Can you imagine selling 1.18 million vehicles every year and then not only getting anything in return, but actually losing money doing it? In other words, you’re paying to play in a market… doing everyone else a favor. Why continue with such a model if your end goal is to generate profit and positive cash flow?

And lest we forget: Opel wasn’t “a money loser the last several years”. It was a money loser for the last 16 years straight. Almost two decades.

Not counting the pension obligations, the immediate moneys GM is gaining from this deal PLUS the annual savings it will generate will allow it to partake in other, more profitable ventures. Perhaps bringing Chevy back to Europe could be one of those, although I’m sure many will disagree with me on that.

What Alex says is true and he did not even touch on the over capacity of the plants.

The situation Opel was in was not unlike GM before the Chapter 11 here but that was not an option.

Now that PSA was bailed out they have to make some choices to move forward. One to merge with a stronger company but like FCA they are not going to find anyone willing. Or two do the VW plan and ramp up volume But the problem is Opel and PSA have too little volume and odds are against them making increase in the future.

Lets face it PSA really has no real products that most want or even care about. French cars are often odd, expensive and more often a punch like like the Le Flip.

GM for the most part got a sucker to buy Opel and walk away with money that can help them shore up their own stock prices and even buy back stock to secure them in the future.

Today bigger is not better. Profitable and high stock prices are the goal.

To be very honest GM is in a pretty good place compared to most MFG’s right now and if times get tough they hold a upper hand according to the market watchers.

They just need to continue to rebuild Cadillac and work to grow the divisions they have in the markets they are in.

I know the Euro people hate to hear this but they are no longer the second most important market anymore. America is second and China is number one.

I am not sure how many of you have refused to notice the many changes GM has tried and how the labor and governments have fought them on many levels.

Just how many more years are they to lose money before they can lose the problem?

Also fresh out in the European financial press: GM will take a one-time cost in the books of 4 to 4.5 billion as the losses of Opel cannot be used in the future any more to offset taxes. This brings the total impact of this deal to:
1) GM receiving 2.2 billion from PSA,
2) GM needing 2 billion less cash reserves, what will be used to buy back stock,
3) GM paying 3 billion in its European pension funds,
4) GM entering a negative impact in the books of 4.5 billion to compensate for lost carried-forward losses.

The reactions of Opel owners have been massively negative in the press here: most say they will now look for “another brand” as they fear quality problems if Opel will be built using French technology. VW and Ford will definitely win new customers.

As a fan of Opel it is sad to see it go, but it had to be done. Other GM brands, like Holden, will actually benefit from this. With Opel out of the way GM will look to Holden for more design work as the Melbourne studio is now only one of two design studios GM has that can design a vehicle and build it completely in house. We’ve all seen what they can do as Buick Avista was done by Holden. They will also look to Holden for right hand drive vehicles development.

Now. What I think will happen? Call me crazy but I think GM will purchase FCA in the near future. Keep Ram and Jeep. Kill Dodge and Chrysler. Take Fiat and Alfa back where it belongs, Europe. This move takes them back into European market and makes them the biggest manufacturer in the world again.

I read PSA intends to re-enter the US market. Won’t that hurt GM? And in turn if GM goes back into Europe with Chevy won’t that do the same there to PSA? Opel has been losing money for years so cutting them lose isn’t the worst thing that GM could do. GM needs to build up their reputation as one of the best made cars and trucks in the World if they intend to sell in the European market. But who knows, maybe the plan is to concentrate more in China where GM sells more cars now then in the USA

In all, PSA is planning on coming back to the U.S., but that is at least a decade away, if not more.

The only thing GM can and did do is prevent it from entering other markets with vehicles developed by Opel under GM. Other than that, PSA is of course free to do whatever it wants to do and enter whatever markets it wants to enter.

A note about China: yes, GM sells more cars there than in North America… but it makes very little money from selling cars in China. Details on that can be found here:

I have deliberately resisted the urge to comment as soon as this was announced, instead I have spent all day going over the details, reading and watching financial evaluations and also talking to contacts I have at Vauxhall. The opinions are overwhelming and the verdict is very, very, clear and simple – apart from on this board apparently.

This is a very good deal for the PSA Group

This is a marginally positive deal for Vauxhall & Opel

This is a disastrous deal for General Motors

I was a little surprised that, with details that have been announced, how well Vauxhall-Opel have came out of the negotiations and gives a glimmer of optimism for the future. As for GM I thought it would be bad but I didn’t realise just how bad. Anybody that thinks that this deal is going to benefit GM in any way at all are kidding themselves, it is a disaster on a massive scale and one that within 2 years GM will regret, within 10 years it will not matter because GM will be under new ownership. Mary Barra will go down in history as the woman who killed GM.

I wonder how much BMW, Audi, Mercedes-Benz, Hyundai, Kia, Toyota, Honda or Nissan “dreamed” when entering the U.S. market at at time that it was dominated by local American car brands. Fast forward 50 years, and my how things have changed.

So yes, there is a good deal of opportunity and hope for Chevrolet and Cadillac in Europe.

But it’s ok, we all know how negative you feel towards Chevrolet in Europe. Luckily, your personal sentiment is irrelevant and this is just business.

Ignorence is obviously bliss for you but for the rest of us that live in the real world of business it is not my opinion that will be irrelevant it will be General Motors and unfortunately that will have a huge impact for peoples jobs and livelyhood and ultimately the US economy. If you want to fast forward 50 years by all means go from 1967 when GM was the largest company in the world – period – to 2017. The writing is on the wall … and its been signed by Mary Barra

I believe in a few decades from now, historians will regard this announcement as the beginning of the end for General Motors.

The analogies with previous and similar announcements are quite striking. When Chrysler exited the UK and Europe, it was for reasons of similar, supposed merit i.e. focusing upon growth opportunities and enhancing profitability. Today, Chrysler exists as a subsidiary of Fiat. And all that remains of Chrysler Europe which itself was acquired by PSA Groupe is the former Simca factory at Poissy.

When British Leyland began to retreat from the world to focus upon its home markets, the drivers were to enhance profitability and exploit new growth opportunities. Whilst Jaguar, Land Rover, Range Rover and MINI continue to thrive as subsidiaries of Tata and BMW – together with Leyland Trucks (Paccar), Ashok Leyland in India and BMC in Turkey – the rump of dear old BL now comprises an octagonal badge glued on to a range of MG branded Chinese made superminis and SUVs.

The lesson of hindsight tells us it’s quite frequently better to fix problems, rather than walk away from them. Sure Opel Group had and continues to have its problems… but as part of GM – a company with global scale and supposed global ambitions, they were inherently fixable, subject to the will to fix them.

But by combining a recovering car manufacturer, with a limited global footprint in the guise of PSA Groupe, with a seriously ill car manufacturer with an even more restricted footprint and even less brand recognition globally, I don’t expect the ending to be particularly pretty or happy.

I think it was Marx who said history repeats itself, first as a tragedy and then as a farce. If Chrysler and British Leyland were tragedies, then Opel Vauxhall and PSA Groupe is surely a farce. For the sake of all involved however, I very much hope I’m proven to be wrong.

“When British Leyland began to retreat from the world” that was just the consequence of the demise of the British Empire.

Todays British auto industry exists only because thatcherite policies turned Britain into a cheap labor export platform to the European Continent, by joining the EU (then EC, or EEC) i.e. participating in developing the common market, and by her war against labour driving down wages.

British Leyland’s collapse wasn’t only about the fall of the Empire. Small nations, with smaller GDPs that the UK, have thriving auto sectors.
West Germany fostered great car companies. As has S Korea, a nation at perpetual war. Even Italy managed to support FIAT as a native owned, healthy company until the turn of the new millennium.

(Continued)
Death of the British Empire can be blamed for many things, including adverse effects on national morale; more importantly, however, was the failure of successive UK governments, both Labour and Tory, to cultivate effective industrial planning so that both workers and management could make common cause.
With good reason Rover was sabotaged by unions while management did everything possible to cut costs,and quality, up to the point where vehicles became in everyway unattractive. One could argue that the goal was (intentional) failure seeing as UK investors knew that stock in GM, Ford, VW, and Benz offered a more lucrative return on capital.
Before restructuring, this same attitude was present in the US in terms of the Big Three. To a certain extent, this attitude remains. We are witnessing the decline of GM even as it reaches a technical zenith as a result of the firms’ damaged brands. With all of the awards and even with the Consumer Reports love Chevrolet is still seen as a second rank choice for people with bad credit.
Only a merger with a storied company like Honda will save GM in the long term. An FCA would make FCA too SUV/truck based overly relient on NA. Merging with a Chinese firm would only further cheapen the company.
It is a pity that both Mazda and Subaru have already allied with Toyota as they would bring technology, street cred, and volume. Ride sharing with Maven will loss money faster than Opel if Uber offers any clue and aren’t any sort of solution for our shrinking General.

The decline of an empire can be retarded or accelerated by actions of the goverment of said empire, but is primarily cause by the “natural” economic evolution of th economy. The decline of the British Empire began at its peak at the end of the so called 1st World War, after the latest robberies of colonies were secured by the US intervention in the European war, done in order to prevent the rise of a competitor for world domination emerging in Europe. The “dominions”, i.e. the colonies with a majority “white” colonial settler population made themselves more and more independent. The Washington Naval Tready of 1921/22 stipulated that Britain might have not more war ships than the USA. Herbert Hoover, as US secretary of commerce (before he became POTUS No. 31) railed at “english monopolies” on rubber and other raw materials urgently needed by the US economy (besides rationalizing US economy by standardization). The acquisition by GM of the British Vauxhall in 1925 and the German Opel in 1929/31 testify to the US’ growing economic weight in Europe. the USA dicated the terms of the solution of the financial crises related to the German reparations — see Dawes Plan and Young Plan. On August 21, 1941, British premier Churchill had to agree to the “Atlantic Charter” including that “all States, great or small, victor or vanquished,” should enjoy the “access, on equal terms, to the trade and to the raw materials of the world which are needed for their economic prosperity;” i.e. to open the British Empire to the superior US economy. One could see the first half of the 20th century as the conflict between Germany and the USA over the redivision of the British Empire. The USA won, and became the dominant European power.

Yes, the US in addition to native people combined with great of communism destroyed the British Empire.
Losing the Empire in no manner predetermined the decline and eventual death of the British domestic brands.
Germany and Japan were vanquished by war. France lost her Empire. The UK domestic brands died in large part because successive UK governments were unable to allign the interests of both labour and industry. A grand compromise between worker and owner-as we see in Germany-would have allowed the UK domestics to thrive regardless of American aims. We, to a lesser extent, see this also on France and Italy.
Lastly, we must blame the British consumer for failing to support brands like MG and Rover. Renault made horrible cars yet the French turned towards economic nationalism.
Only on Anglosphere do we see shoppers fail to support the domestic supply chain and therefore a neighbour’s job. In addition to the UK, OZ is an example of this with Holden, Toyota and Ford leaving. The coastal US still ignores Chevrolet over Hyundai.

(Continued)
Death of the British Empire can be blamed for many things, including adverse effects on national morale; more importantly, however, was the failure of successive UK governments, both Labour and Tory, to cultivate effective industrial planning so that both workers and management could make common cause.
With good reason Rover was sabotaged by unions while management did everything possible to cut costs,and quality, up to the point where vehicles became in everyway unattractive. One could argue that the goal was (intentional) failure seeing as UK investors knew that stock in GM, Ford, VW, and Benz offered a more lucrative return on capital.
Before restructuring, this same attitude was present in the US in terms of the Big Three. To a certain extent, this attitude remains. We are witnessing the decline of GM even as it reaches a technical zenith as a result of the firms’ damaged brands. With all of the awards and even with the Consumer Reports love Chevrolet is still seen as a second rank choice for people with bad credit.
Only a merger with a storied company like Honda will save GM in the long term. An FCA would make FCA too SUV/truck based overly relient on NA. Merging with a Chinese firm would only further cheapen the company.
It is a pity that both Mazda and Subaru have already allied with Toyota as they would bring technology, street cred, and volume. The sort of thing Opel could have done for GM outside of Europe in markets where Chevrolet it’s far from a consumer first choice.
Ride sharing with Maven will loss money faster than Opel if Uber offers any clue and aren’t any sort of solution for our shrinking General.

Cadillac in Europe has had more comebacks than Elvis, whilst for a multitude of reasons, Chevrolet does not and will not work any time soon.

In fairness to David, his sentiments are not just his own – they are widely shared. At best Chevrolet is regarded as the car manufacturer that left customers high and dry after it did a runner from the UK and Europe. And at worst, it’s regarded as an irrelevancy.

For either brand to gain traction in the UK and Europe would require billions to be spent on producing a completely different model range and almost certainly cost more than fixing the mess that was and is Opel Group.

US people dont know wats happening europe car market and whats car there is like eu people dont konw to many us staff.
but yes eu have so many opel vecra versions and sport versions like old vectra vectra 2000 turbo and no- vectra i200-vectra i500-vectra i35 – vectra opc and so on. and base vectra so nothing to same saturn aura

I want to point out again that i think some people think that GM’s global size is far more important than its profitablity. Yes this could seem like a bad thing, but to be honest Europe doesnt provide anything to GM, execpt size, at least that was the case when Opel was under GM. What people are failing to realize is the growing potential for GM. Its not the end of the world nor is it the end of GM. They are far stronger than they have ever been. #4 isnt such a bad place to be with about 9M units moved compared to 10M